Question

Required information

Exercise 9-8A Current liabilities LO 9-1, 9-2, 9-4

[The following information applies to the questions displayed below.]
 
The following transactions apply to Ozark Sales for Year 1:
 

1. The business was started when the company received $50,000 from the issue of common stock.

2. Purchased equipment inventory of $175,000 on account.

3. Sold equipment for $209,000 cash (not including sales tax). Sales tax of 8 percent is collected when the merchandise is sold. The merchandise had a cost of $134,000.

4. Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 5 percent of sales.

5. Paid the sales tax to the state agency on $159,000 of the sales.

6. On September 1, Year 1, borrowed $22,000 from the local bank. The note had a 6 percent interest rate and matured on March 1, Year 2.

7. Paid $5,900 for warranty repairs during the year.

8. Paid operating expenses of $52,000 for the year.

9. Paid $125,500 of accounts payable.

10. Recorded accrued interest on the note issued in transaction no. 6.